$2.5 billion wagered in Illinois' first year of video gaming

Friday

Oct 18, 2013 at 11:56 AMOct 18, 2013 at 11:56 AM

By Greg StanleyRockford Register Star

ROCKFORD — The first year of legalized video gaming in Illinois has come and gone. Gamblers across the state wagered more than $2.5 billion and lost $205 million since the terminals went live last September.

Video gaming terminals are now raking in nearly $30 million a month, making them more profitable than nine of the state's 10 riverboat casinos.

And while Winnebago County has proven to be one of the most active areas for video gaming in the state — local gamblers have lost $18.9 million here — it's unclear how much of an effect the money being pumped into the machines has on the local economy.

In fact, the majority of the money spent in a local terminal leaves the area in many cases.

Unlike casinos, which can draw tourists and pump new money into a locality that otherwise would not have come, the video terminals are now readily available everywhere across the state. Because there's no difference in the five video poker or slot machines you'd find in a bar in Springfield or in the Chicago suburbs or in Rockford, there's no reason to expect a video gambler to travel. That means the vast majority of money spent at a local terminal is probably spent by locals.

Since it's money gambled, it's safe to assume that money would have been spent elsewhere, said Bob Evans, professor of economics and political science at Rockford University.

"It would not be logical to assume this money would have been saved or invested," Evans said. "So the question is how they would have spent it. Is there a net increase of money flowing into the city, or is it just a diversion from one local source to another?"

In other words, if a bar owner gains $5 because someone doesn't spend $5 on a movie, there is no gain to the local economy, Evans said.

And a chunk of the money is lost to the area.

Of the profit at each terminal, 25 percent is sent directly to Springfield for the state of Illinois' general fund. Another 35 percent goes to the terminal operator, which is typically a small company licensed by the Illinois Gaming Board to install and maintain the gaming terminals. The companies are based throughout the state and don't necessarily have a local connection.

Of the money that stays local, 35 percent goes to the owner of the bar, restaurant or parlor that houses the terminal, and 5 percent goes to the local municipality.

And bar and restaurant owners have enjoyed the financial boost. Many bars like Scanlan's in Rockford have added hours to accommodate gamblers who want to start earlier. Some bar owners like Luke Meyer have expanded to open small parlors that offer the slot and poker machines without the bar atmosphere. Even businesses traditionally outside of liquor and food, such as Sonco Pool Supplies in Loves Park, have added the terminals to supplement business.

Some bars have added staff, but the gaming terminals are not labor-intensive, and the effect on jobs has been minimal.

Unless you're a bar owner, any local benefit you'd see from video gaming would come from the 5 percent that goes to the municipality.

"I don't think anyone is calling this a vehicle for development," Evans said. "But what it does do is generate money for a city that's a substitute for taxation,"

It's up to each municipality how to spend its 5 percent.

The Rockford City Council has designated its cut will be used on equipment and vehicle purchases. Rockford had the highest betting totals in the state over the last year, generating $400,000 in local taxes. That will be used to help pay off leases on city squad cars, ambulances, trucks and fire engines.

Since May, when the amount being gambled first started to level off, Rockford has been getting an average of $48,000 a month in tax revenue.

Springfield comes in a close second and is followed by Loves Park, which net $229,000 this past year from the gaming terminals. Since May, Loves Park — with a population of about 23,800 — has received about $28,000 a month.

Just half of that annual revenue is enough to pay the Loves Park portion of a multi-million dollar regional effort to build and upgrade amateur sports venues.

"We embraced video gaming early on because we knew it would be a pretty good revenue source," Lindberg said. "It's exceeding what we anticipated. It's something that's not going to count as an answer for everything, but we've been fortunate."

Greg Stanley: 815-987-1369; gstanley@rrstar.com; @greggstanley

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.